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Penguin Corporation

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Question

Penguin Corporation acquired 80 % of the outstanding voting stock of Snow Company on January 1, 2012, for $420,000 in cash and other consideration. At the acquisition date, Penguin assessed Snow?s identifiable assets and liabilities at a collective net fair value of $525,000 and the fair value of the 20 percent noncontrolling interest was $105,000. No excess fair value over book value amortization accompanied the acquisition.;The following selected account balances are from the individual financial records of these two companies as of December 31, 2013;Penguin Snow;Sales $640,000 $360,000;Cost of Goods Sold 290,000 197,000;Operating expenses 150,000 105,000;Retained earnings, 1/1/13 740,000 180,000;Inventory 346,000 110,000;Buildings (net) 358,000 157,000;Investment income not given -0-;Each of the following problems is an independent situation;A. Assume the Penguin sells Snow inventory at a markup equal to 40 percent of cost. Intra-entity transfers were $90,000 in 2012 and $110,000 in 2013. Of this inventory, Snow retained and then sold $28,000 of the 2012 transfers in 2013 and held $42,000 of the 2013 transfers until 2014.;On consolidated financial statements for 2013, determine the balances that would appear for the following accounts;Cost of Goods Sold;Inventory;Noncontrolling Interest in Subsidiary?s Net Income;B. Assume the Penguin sells Snow inventory at a markup equal to 40 percent of cost. Intra-entity transfers were $50,000 in 2012 and $80,000 in 2013. Of this inventory, $21,000 of the 2012 transfers were retained and then sold by Penguin in 2013, whereas $35,000 of the 2013 transfers was held until 2014.;On consolidated financial statements for 2013, determine the balances that would appear for the following accounts;Cost of Goods Sold;Inventory;Noncontrolling Interest in Subsidiary?s Net Income;C.;Penguin sells Snow a building on January 1, 2012, for $80,000, although its book value was only $50,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight line method with no salvage value.;Determine the balances that would appear on consolidated financial statements for 2013 for the following accounts;Building (net);Operating Expenses;Noncontrolling Interest on Subsidiary?s Net Income

 

Paper#79771 | Written in 18-Jul-2015

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